Summit South

Friday's meeting in Mexicali between President Reagan and Mexico's President Miguel de la Madrid will not be as dramatic as other summits that Reagan has had with world leaders. But that does not diminish its importance.

For the first time in the series of meetings between Reagan and De la Madrid, no one anticipates public disagreement between Mexican and U.S. officials over Central America. With Mexico facing a worsened economic situation since earthquakes ravaged the heart of the nation in September, government leaders have focused most of their attention on internal matters.

Since the crisis in Central America began in 1979 with the overthrow of Nicaragua's dictatorship by a leftist revolution, Mexican leaders have tried to calm Washington's fears about what is happening in that volatile region. U.S. officials, especially those appointed by Reagan, insist that the Nicaraguan revolution and guerrilla insurgencies in El Salvador and Guatemala are part and parcel of the struggle between the Soviet Bloc and the Western allies. The Mexicans consistently strive to remind them that Central America's problems also stem from historic social and political injustices there.

More important, Mexico and the other nations of the Contadora Group (Venezuela, Colombia and Panama) have tried to offer a diplomatic alternative to Reagan's heavy-handed policies in Central America. While the Administration has poured large amounts of military aid into El Salvador and Honduras, and has waged a barely covert campaign to overthrow the Sandinista regime in Nicaragua, Mexican diplomats have patiently tried to draw up a peace treaty that they hope will keep the five Central American countries from warring with each other long enough to resolve their internal problems. This Contadora process has been slow and frustrating. Recently the countries involved agreed to delay their peacemaking efforts until later this year, when new governments are installed in Honduras, Guatemala and Costa Rica. Some fear that this is the end of Contadora, but it is vital that the peace process continue.

Mexico's unfortunately diminished interest in Central America will put the focus of the Reagan-De la Madrid summit back on bilateral issues between the United States and its southern neighbor. Whenever that happens, people on both sides of the border realize again how complicated and important the historic relationship between the two nations is.

The key issues that the two leaders will discuss Friday are economic. After two years of moderate success in dealing with Mexico's economic troubles, 1985 was a bad year for De la Madrid. The trade surplus that his government had relied on to repay Mexico's $96-billion foreign debt has been shrinking because of the continuing drop in oil prices. Now the debt problem has been exacerbated by the multibillion-dollar cost of earthquake relief and reconstruction. More than ever, Mexico needs flexibility from its creditors.

The Mexican government is trying to obtain $2.5 billion in new economic assistance for 1986. One useful gesture that Reagan can make is to offer whatever assistance he can to help Mexico get that money. In exchange, he should urge De la Madrid to continue his efforts to liberalize Mexico's economy. One important step in that direction was De la Madrid's recent decision that Mexico would sign the General Agreement on Tariffs and Trade. More forceful action like that, which helps prod Mexico toward a free-market system, is needed.

There was speculation in the aftermath of September's earthquakes that Mexico's days as a model of political stability and economic progress in Latin America were over. Such alarms are premature. With a diversified industrial base, vast petroleum reserves, large internal markets and a flexible political system, Mexico still has great potential. In spite of periodic differences and squabbles, the long-term relationship between Mexico and the United States must remain positive and constructive. Periodic presidential summits help keep it that way.